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bshs 373

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Individual Assignment for BSHS 373 week three.

What are the major accounting differences between nonprofit and for-profit organizations?

A for-profit organization exists primarily to generate a profit, that is, to take in more money than it spends. The owners can decide to keep all the profit themselves, or they can spend some or all of it on the business itself. Or, they may decide to share some of it with employees through the use of various types of compensation plans. This is where accountants will be needed, and they will set up budgets for the owner of the organization to work with.

A nonprofit organization exists to provide a particular service to the community. The word \\\"nonprofit\\\" refers to a type of business - one which is organized under rules that forbid the distribution of profits to owners. The only time an accountant would be needed for non money making organization would be to pay their taxes. Every organization, whether profitable or non-profitable needs to pay federal income corporate taxes on their net earning. If a company does not make a cent, then they must go through the internal revenue to get exempt because of this circumstance. Again, the account will work with the internal revenue to get this done.

Why are audits becoming increasingly important in the nonprofit sector? Cite at least three reasons.

Audits are becoming increasingly important in the non profit sector because they want to demonstrate good governance, and effective management of minimal resources.